Samuels Jewelers Files for Bankruptcy

RAPAPORT... Alleged Indian fraudster Mehul Choksi’s US jewelry chain has
filed for Chapter 11 protection, according to court papers.

Samuels Jewelers has brought in liquidators to begin selling
its assets so it can pay off debt, the
Tuesday filing at the District of Delaware Bankruptcy Court showed. The company listed liabilities between $100 million and $500 million, including $84 million to Wells Fargo Bank and $10 million to GB
Credit Partners. In all, the jeweler has more than 200 creditors.

The retail chain, which Choksi’s Gitanjali Gems owns, will
close more than 100 of its 120-plus stores, according to the Wall Street
Journal.

Indian authorities are searching for Choksi and his nephew,
jeweler Nirav Modi, in connection with an alleged $2 billion bank fraud against
the country’s Punjab National Bank. They both fled the country, with Choksi currently
living in Antigua and Barbuda, according to reports citing his lawyer.

This is not the first time Samuels has sought court protection, according to the filing. The retailer’s former owner, Barry’s
Jewelers, filed for bankruptcy in 1992 before resuming profitability. In 1997, Barry’s once again sought Chapter 11 protection. In 1998, the company changed
its name to Samuels Jewelers, moved its corporate headquarters from California
to Texas, and sold a majority stake to DDJ Capital Management. The firm went
through bankruptcy a fourth time in 2003, before Gitanjali acquired it in 2006.